debating progressive politics in Europe and beyond
Conservative economists such as Manfred Neumann have sought to downplay the impact of higher interest rates on the sovereign bonds of crisis-hit euro countries. They have argued that the interest rates recently demanded of countries like Italy and Spain are no higher than prior to the euro. The problem, in their view, was the pre-crisis [...]
As had been expected, despite the dissention of the Bundesbank, the ECB has announced a programme of, in principle, unlimited purchases of euro area government bonds on secondary markets. Adding yet another acronym to the alphabet soup engendered by the crisis, the program is termed OMT – Outright Monetary Transactions – and will replace the [...]
Business lobbies and conservatives have become extremely good at hijacking progressive policy concepts and perverting them into something that suits their own agenda. European economic governance is a perfect example of this. In the nineties, trade unions and progressive politicians were staunch defenders of economic governance. At the time, the idea was that if all [...]
News is in that the UK is back in recession, its economy having contracted in the last quarter of 2011 and the first of this year. In fact whether output growth is a fraction above or below zero is of more symbolic than real significance – and the figures for the first quarter may subsequently [...]
The euro area finance ministers meeting in Copenhagen have agreed on the size of the firewall, that is the funds to be made available to the new European Stability Mechanism and the way the funds in the existing European Financial Stability Facility are to be managed; see the eurogroup statement here. They arrive at a [...]
Today’s unemployment numbers are not just depressing. They should make policymakers ashamed and everyone else extremely angry. 23.8 million men and women in the EU27, and 16.5 million in the euro area, were unemployed in December 2011. This is more than 20,000 more than in November, and the November figures have themselves been revised upwards [...]
There was a lot of European economic news today. Not all of it was bad. The media and investors are celebrating the success of today’s bond auctions by Spain and Italy, the two most critical countries in Europe’s sovereign debt drama. Bond yields fell and stock markets rose, in Italy by 2.7%. Yet it is [...]
Finally: we are all Greece! OK, not quite. But the news that Germany was unable to sell one third of the new government bonds it sought to auction today is a worrying sign. ‘Investors boycott German government bonds!’ screamed the Handelsblatt headline. Has Germany joined the periphery, too? Has the core melted? What has happened, [...]
The initial enthusiasm of the financial markets over the last European summit was short lived as the new “kick down the can, grand plan” to solve the crisis was agreed upon. To bolster the market, the remnants of the famous EFSF 440 billions Euros – which, never forget, was also provided by the periphery countries [...]
Sometimes a counter-intuitive statement is based on a clever insight. For example, the statement ‘fiscal austerity can lead to higher government deficit ratios’ sounds implausible, but (most) economists agree that, at least under certain conditions, it may well apply. The reason is that the austerity reduces output, and thus the denominator of the deficit ratio, [...]
The ECB raised interest rates on 13 April and again on 13 July. That that was a mistake was evident at the time (here and here). We have since seen how the predicted worsening of the situation for peripheral countries has indeed come to pass. As of today we have 150,000 more reasons to protest [...]
One of the arguments – there are others – I and other commentators made against the ECB’s two rate hikes (here, here and here) was that it would significantly worsen the outlook for the already struggling peripheral euro area countries. A simple chart (source) shows just how justified this fear was: Bond spreads had been [...]
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